April 30, 2021
Here are updates of two charts I have posted monthly regarding income and consumer spending during the COVID-19 recession, including new numbers for March and revisions to numbers for prior months.
As a result of the $1.9 trillion federal relief package enacted in March, personal income rose 21.1% from February to March. Consumer spending increased by a more modest 4.2%, while the saving rate soared to 27.6%.
On the first chart, the stacked columns show estimated personal income for the U.S. as a whole, by month, from January 2019 through March 2021. The numbers are seasonally adjusted annual rates. I have broken personal income into four parts: employee compensation (wages and salaries, and supplements); unemployment insurance benefits; other government social benefits (e.g., Social Security, Medicare and Medicaid); and other income (e.g., interest, dividends and profits of non-corporate business activities, including property rentals).
Personal income in March was $4,212.8 billion greater than in February. Government social benefits were up by $3,985.5 billion. Employee compensation was up by $115.4 billion. All other sources were up by $111.9 billion.
Also on the first chart, the black line shows monthly personal consumption expenditures. Again, these numbers are seasonally adjusted annual rates. Consumption expenditures in March 2021 were $616.1 billion (4.2%) more than in February.
The second chart shows the personal saving rate, monthly from January 2019 through March 2021. (The saving rate is equal to the amount of personal saving divided by the amount of disposable personal income. Disposable personal income equals personal income less personal current taxes, which are mostly income taxes).
The saving rate jumped from 8.3% in February 2020 to an astounding 33.7% in April and then declined in steps to 12.5% in November. The saving rate moved up modestly in December, jumped to 20.0% in January, fell back to 13.9% in February and jumped to 27.6% in March. The total amount saved from April 2020 through March 2021 was $3.47 trillion. Had the saving rate been the average for 2019, 8.3%, the amount saved would have been just $1.35 trillion. Excess saving over the 12 months totaled $2.12 trillion. Spending down this pool (ocean?) of excess saving will be a source of strength for the economy as the pandemic recedes.
All of these numbers are preliminary estimates that will be revised as more information becomes available to the statisticians at the federal Bureau of Economic Analysis.
The BEA press release is here. A BEA table showing the effects of selected federal pandemic response programs on personal income is here.Categories: Economy.